DTCC Declares No Collateral Value for BTC ETFs in Groundbreaking Decision

By Ben Knight April 29, 2024 In Cryptocurrency, Stock Market
DTCC (Depository Trust and Clearing Corporation) editorial. Depository Trust and Clearing Corporation is an American post-trade financial services company
  • The Depository Trust and Clearing Corporation (DTCC) has updated its annual line-of-credit policy, walking back support for using crypto-based funds as collateral.
  • This may impact those with short-term borrowing plans that are using BTC ETFs as collateral.
  • However, the overall effects of this decision will hopefully be marginal, as brokerages and stock traders should remain unaffected.

The United States Depository Trust and Clearing Corporation (DTCC) has made a stand against crypto ETFs. The financial body, vital to finalising trades and products within capital markets, officially removed all support for using crypto-based ETFs as collateral. The statement says:

No collateral value will be given for any ETF or other investment vehicle that includes Bitcoin or any other cryptocurrency as an underlying investment, hence will be subject to a 100% haircut.

United States Depository Trust and Clearing Corporation

So, what does this mean for institutional players and the industry at large?

Related:  Bitcoin Whale Sighting: $282 Million in BTC Acquired Amid Market Lows

Brokerage Will Not be Affected by Decision, According to Analyst

At face value, this seems like a big deal. It is a prominent financial service within the United States totally wiping support for the crypto market as a tool for accessing a line of credit. For some entities, the decision will cause some headaches as they readjust their debt and collateral requirements.


However, according to a well-known analyst on X, the move from the DTCC will have far less impact than one might initially think. The changes to collateral will only apply to lines of credit (LOC), where a bank or institution allows individuals (or entities) to borrow money for short-term liquidity.

The more important form of collateral in the industry comes from engaging with stockbrokers and markets. According to the X post, this will not be impacted by the DTCC’s change in policy:

The use of cryptocurrency ETFs for lending and as collateral in brokerage operations remains unchanged and continues to rely on the risk appetite of individual brokers.

K.O Kryptowaluty

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Although the panic drummed up by the DTCC’s decision may be somewhat over-the-top, it once again shows the reluctance of several TradFi players to accept crypto even as institutions continue flocking to the scene.

Ben Knight

Ben Knight

Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.

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